LET’S GO FOR A RIDE

Malaysia 2016 | INDUSTRY & INNOVATION | INTERVIEW

TBY talks to Dato' Sri Ben Yeoh, CEO of Berjaya Auto Berhad, on strategic growth ventures, the effects of trade agreements on the automobile industry, and achieving success through customer satisfaction.

Dato’ Sri Ben Yeoh
BIOGRAPHY
Dato' Sri Ben Yeoh has over 40 years of experience in the automotive industry, encompassing the various fields of retail, distribution and manufacturing. In addition to his role as CEO of Berjaya Auto Berhad, he also sits on the board of directors as its Executive Director. He has been a Managing Director of Bermaz and BMTSB since 2008. He became a Fellow of the UK Institute of Motor Industry in 2007 and was named an Honorary Fellow of the institute in 2013.

Your primary business is to import and distribute, but you are also involved in manufacturing. Can you explain this business model further and the importance of the distribution deal with Mazda?

Bermaz Motors initially started distributing Mazda products by importing completely built units (CBU) from Mazda Corporation Japan. Their popularity, a result of the attractive design and advanced technology, encouraged us to further increase our business activities to include local production. A completely knocked down (CKD) program was established to be in-line with our National Automotive Policy (NAP). Incentives are provided under this policy to ensure that the investments for local manufacturing are adequately recovered through competitive pricing and added volume sales. The increased local production activities and the benefits accorded by the government under the NAP gave rise to a joint venture between Mazda Corporation and Bermaz Motor to establish a manufacturing company, Mazda Malaysia. The Malaysian automotive industry is encouraged by the government to embark on local industrial activities, CKD production, and component parts manufacturing. There are two national automobile producers in Malaysia, PROTON and PERODUA. Toyota, Honda, Nissan, and other Japanese brands also have assembly and production facilities in Malaysia, as CBU imports are restricted. Therefore, in order to increase our sales volume we have to also undertake local production activities. The joint venture with Mazda Corporation ensures that we have the necessary support from the principal manufacturer to undertake local production and ensure quality is maintained. With localization of components supported by Mazda Corporation and their Japanese vendors, we are able to secure a local cost content of 40%. This enables us to receive tax rebates from the government under the NAP and we can export to certain ASEAN countries under the ASEAN Free Trade Agreement (AFTA).

What are the main characteristics of the AFTA?

The main advantage of the AFTA is the opportunity of free trade within the major ASEAN constituent countries, such as Indonesia, Thailand, Malaysia, and the Philippines, which are actively involved in the auto industry. The AFTA allows for free imports of vehicles to these major countries without restrictions on imports and there is no tariff imposed on the imports. In another words, there is neither a tariff nor other non-tariff barriers under the AFTA scheme. However, products to be imported under the AFTA scheme should have a minimum ASEAN local content of 40%.

What progress has been achieved through Mazda's SkyActiv green technology?

The SkyActiv Technology basically involves the improvements of the internal combustion engines' efficiency and the use of light, high tensile steel in the body structure to improve the weight and structural rigidity, therefore improving the total structural strength. The transmission is improved to reduce frictional losses and more direct and positive gear changes. The steering and suspension systems are also improved to ensure more linear driving characteristic. The total SkyActiv package therefore ensures that the vehicle is more efficient in engine performance and driving characteristics.

To what do you attribute the company's growth and high profitability?

The success of the company is due to various factors. We come from a very low base and the opportunity for growth is there. It is a matter of convincing consumers that we have the best technology and that this technology is sustainable. In order to be sustainable we must provide a good ownership experience. We have started a program where we provide consumers, namely Mazda owners, with a totally stress-free first three years of ownership, with totally free maintenance and complete warranty coverage. As a result, the retention factor is very high and our CSI rating is good. Mazda owners are well informed of the technology and design of Mazda models and usually act as our ambassadors through their various social activities in the Mazda Owners' Club. This improved brand image allows us to price our Mazda vehicles at a slight premium over our competitors.